EasyJet has warned it is facing its toughest summer holiday season in years as a result of the impact Brexit had on sterling and recent terrorist attacks.

The low-cost carrier said it has been forced to slash fares five per cent year-on-year in a bid to boost demand and costs have also soared as a result of sterling having fallen by around 10 per cent since the Brexit vote.

Chief executive Carolyn McCall said the third quarter was the most challenging trading in her time in charge and “for airlines, one of the most difficult periods we have seen in a long time”.

EasyJet said the slump in the value of sterling has added around £40 million to its cost base as a result of currency swings, notably in purchasing fuel in US dollars.

Third quarter revenues dipped 2.6 per cent to £1.2 billion as the group was forced to promote flights in June and July which are normally in high demand in peak season trading.

McCall said the drop in the value of sterling post Brexit vote is making it more expensive for UK holidaymakers to travel abroad.

“The economic and operating environment has been difficult in the third quarter due to a number of factors including air traffic control strikes and other industrial action, runway closures at London Gatwick and severe weather,” she said.

“These factors combined with industry capacity growth in short haul continue to have an impact on industry yields at a peak time of year.

“More recently currency volatility as a result of the UK’s referendum decision to leave the EU as well as the recent events in Turkey and Nice continue to impact consumer confidence.”

EasyJet declined to give guidance on its full-year profits, but cautioned, “as a result of events in the last week, the revenue per seat trajectory in the fourth quarter remains uncertain”.